Not upheld: irresponsible lending, misrepresentation, unfair credit relationship under Section 140A CCA, breach of Timeshare Regulations, undisclosed commission, unfair contract terms complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr H and Mrs W purchased a Signature Collection fractional timeshare membership in February 2018 for £13,826, borrowing £30,161 through Shawbrook Bank Limited at £348.60 per month over 180 months. They complained in 2020 alleging the Supplier misrepresented the membership as an investment, applied undue sales pressure, included unfair contract terms, and breached Regulation 14(3) of the Timeshare Regulations. They also alleged the Lender failed to conduct proper affordability checks and that undisclosed commission arrangements rendered the credit relationship unfair. The ombudsman found no actionable misrepresentation, no evidence that investment marketing motivated the purchase (which was primarily an upgrade to a superior product), and no unfair credit relationship. The commission at 5% of the borrowed amount was not found to be so high or concealed as to be unfair, and the complainants had full information on credit costs. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual and material misrepresentation by the Supplier regarding the investment nature, guaranteed end date, exclusivity, or necessity of the membership. While acknowledging the Supplier may have breached Regulation 14(3) by marketing the membership as an investment, the ombudsman concluded this was not material to Mr H and Mrs W's decision to purchase, as they were primarily motivated by upgrading to a superior product with more holiday points rather than investment returns. The ombudsman rejected allegations of undue pressure, noting Mr H and Mrs W's prior timeshare experience, the 14-day cooling off period they did not exercise, and their lack of credible evidence. Regarding the credit relationship under Section 140A, the ombudsman found the commission arrangement (5% of amount borrowed) was not so high as to render the relationship unfair, particularly given Mr H and Mrs W had full information on the cost of credit and wanted the membership. The ombudsman placed little weight on the unsigned, undated witness statement and generic complaint letters, finding them unreliable and influenced by the Shawbrook & BPF v FOS judgment. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench but distinguished the facts as involving a much lower commission rate and adequate disclosure of credit terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website